Remember the Obama Administration plan to double exports as a way to rebuild the US economy? Well it looks like the one part vision and a pinch of desire to change is not enough. The New York Times has analyzed the progress so far, with mixed results, and highlights the many barriers to achieving the goals of the National Export Initiative (NEI).
The challenges include:
- Manufacturing Leadership. We are becoming more and more of a service economy. As the country is fighting to exit the recession, companies are uncertain of their ability to access capital and invest in the US in this time of increasing regulation and taxes. Simply put, manufacturing capacity and jobs are being exported (but unfortunately don't count towards the doubling objective). So if you aren't producing more how do you export more?
- The Rising Strength of the Dollar. The Euro bottomed with the banking crisis and has caused the dollar to appreciate. While China has talked about slowly appreciating the renminbi, it is still promoting a steady flow of exports to world markets, and increasing competition for US Exports.
- The Political Sensitivity of Trade Agreements. As the election year approaches, I can't see Congress getting too aggressive on trade agreements. Clearly from a State-level there are winners and losers when trade agreements like NAFTA are implemented. Who is going to fire up the old job debate now when the economy is stuck in neutral and slowly rolling backwards?
Exports in the first four months of 2010 have increased by 17 % versus the same period in 2009. However today we learned that the real trade deficit increased in June from $46bn to $54bn.
Clearly we aren't playing on a level field and struggle with trade barriers erected by countries around the world. For example, a wine industry expert says, “The single most restrictive barrier to wine exports remains the high import tariffs of most of the major markets buying U.S. wine today.”
Read more about the barriers to increasing exports at the New York Times: Hurdles Deter Obama’s Pledge to Double Exports.
Thanks to Lauren for the inspiration for this post.
This post was published on August 12, 2010 and updated on March 6, 2015.